Bouygues prevails in auction for Engie’s energy services business
Fraught bidding for a significant French employer prompted allegations that foreign investors were getting short shrift
French state-backed group Engie has selected a €7.1bn bid from conglomerate Bouygues to buy its energy services division, after a fraught auction that took on a political edge six months ahead of presidential elections.
Bouygues, which is controlled by billionaire industrialist Martin Bouygues and his family, beat US private equity firm Bain and France’s Eiffage, a civil engineering company.
The battle for Equans, which undertakes energy efficiency projects and facilities management for corporate clients, had raised hackles among rival bidders over who the government would back and whether foreign suitors would stand a chance.
With a near 24 per cent stake in utility Engie, giving it three out of 14 board seats, the French state had a significant role in picking the winner. Equans’ status as a large employer, with more than a third of its 74,000 workers in France, added to the sensitivity of the sale.
Seven bidders were originally in the running, including several international private equity firms, some of which alleged that foreign investors were getting short shrift. They questioned whether the state was favouring Bouygues given that the group has extensive government contracts and Martin Bouygues has been a longtime ally of the president, Emmanuel Macron.
Engie said on Saturday that it would enter exclusive negotiations with Bouygues, and that the deal was expected to complete in the second half of 2022.
Engie chief executive Catherine MacGregor told the Financial Times that Bouygues had put in the highest bid. She said its proposal was a good fit culturally for Equans and “had really stood among all offers and made it almost an easy decision”.
Asked about backbiting surround the deal, MacGregor said that the sale had sparked a “strong competitive spirit” among bidders but that the process had been rigorous.
“It allows us to simplify the group in order to grow our core businesses, notably renewable energy,” MacGregor said of the disposal.
Engie, which has been trying to refocus its sprawling structure, also sold a stake in waste and water management Suez last year as it raises funds for investments.
The takeover of Equans is Bouygues’ biggest ever acquisition. Once the deal is finalised, Equans will become its largest division, adding roughly €12bn in annual revenue and representing just under a quarter of the enlarged group.
Bouygues is betting it can benefit from a wave of post-Covid infrastructure spending plans from the US to Europe.
It pledged not to fire any workers in Europe for five years after the deal closes, and promised to create an additional 10,000 jobs in that time.
Equans, a newly created division within Engie, groups together myriad businesses that install refrigeration and heating systems or specialise in electrifying transport networks. The business is labour intensive and has been hit by shortages and hiring difficulties.